Could the Senate’s Unanimous Approval of the No Tax on Tips Act Transform Income for Service Workers

The U.S. Senate unanimously approved the “No Tax on Tips Act” on May 20, 2025, in an unexpected and swift vote that surprised many observers. This legislation aims to establish a new tax deduction of up to $25,000 specifically for cash tips that employees report to their employers for payroll tax withholding. The deduction is limited to workers earning $160,000 or less annually, with this income threshold expected to rise with inflation in future years

The bill was introduced by Senator Ted Cruz (R-Texas) in January 2025 and was brought to the Senate floor by Senator Jacky Rosen (D-Nevada) through a unanimous consent request, a procedure rarely used for major tax legislation. No senator objected, resulting in the bill’s unanimous passage.

Senator Rosen emphasized Nevada’s significance in this issue, noting that the state has the highest number of tipped workers per capita in the nation, and expressed that the bill would provide immediate financial relief to many hardworking families in the hospitality and service industries. She also highlighted that tips are essential income for many workers, not just bonuses

Senator Cruz praised the bipartisan support and expressed confidence that the bill would become law, either as part of a larger Republican tax package or as a standalone measure. He called the legislation a “common-sense policy” that benefits workers across all 50 states.

The bill now moves to the House of Representatives, where it is expected to pass, either independently or as part of a broader GOP tax and spending agenda that includes other tax cuts and policy measures championed by President Donald Trump. Trump had campaigned on eliminating taxes on tips during his 2024 presidential campaign, particularly highlighting the issue in Nevada